A-51623, JUNE 21, 1940, 19 COMP. GEN. 1011

A-51623: Jun 21, 1940

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CHECKS - DECEASED PAYEES - CANCELLATION AND REISSUANCE IN NAME OF DECEDENT WHERE CHECKS ISSUED TO PARTICIPANTS IN THE PROGRAMS ADMINISTERED BY THE AGRICULTURAL ADJUSTMENT ADMINISTRATION ARE CANCELED BECAUSE OF THEIR NONNEGOTIATION PRIOR TO THE PAYEE'S DEATH. 1940: I HAVE YOUR LETTER OF MAY 24. A PROCEDURE WAS DEVELOPED UNDER WHICH SUCH CHECKS ARE CANCELED AND ENCUMBRANCES ARE SET UP IN THE AMOUNTS OF THE CHECKS AGAINST THE APPROPRIATIONS CREDITED WITH THE CANCELED CHECKS. WHEN CLAIMS FOR THE PROCEEDS OF THE CHECKS ARE ALLOWED. NEW CHECKS ARE DRAWN BY THE DIVISION OF DISBURSEMENT. A SERIOUS DIFFICULTY WILL ARISE ON JUNE 30 NEXT. THE OBJECT OF THIS LETTER IS TO SUBMIT FOR YOUR CONSIDERATION AND APPROVAL A PLAN TO MEET THE IMPENDING SITUATION.

A-51623, JUNE 21, 1940, 19 COMP. GEN. 1011

CHECKS - DECEASED PAYEES - CANCELLATION AND REISSUANCE IN NAME OF DECEDENT WHERE CHECKS ISSUED TO PARTICIPANTS IN THE PROGRAMS ADMINISTERED BY THE AGRICULTURAL ADJUSTMENT ADMINISTRATION ARE CANCELED BECAUSE OF THEIR NONNEGOTIATION PRIOR TO THE PAYEE'S DEATH, NEW CHECKS MAY NOT BE ISSUED IN THE NAME OF THE DECEASED PAYEE FOR THE PURPOSE (1) OF OBLIGATING THE APPROPRIATION PRIOR TO THE DATE WHEN IT WOULD LAPSE AND BE CARRIED TO THE " SURPLUS FUND," AND (2) CONTINUING THE AVAILABILITY OF THE PROCEEDS THROUGH THE MEDIUM OF THE " OUTSTANDING LIABILITIES" ACCOUNTS FOR PAYMENT UPON THE FILING OF A CLAIM BY A PERSON ENTITLED THERETO.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF AGRICULTURE JUNE 21, 1940:

I HAVE YOUR LETTER OF MAY 24, 1940, AS FOLLOWS:

IN YOUR DECISION A-51623, DATED FEBRUARY 21, 1938, YOU AUTHORIZED THE FIELD PREAUDIT OFFICES OF THE AUDIT DIVISION TO HANDLE CLAIMS ARISING OUT OF THE DEATH OF PARTICIPANTS IN THE PROGRAMS ADMINISTERED BY THE AGRICULTURAL ADJUSTMENT ADMINISTRATION PRIOR TO THEIR CASHING THE CHECKS DRAWN IN THEIR FAVOR. ACCORDINGLY, A PROCEDURE WAS DEVELOPED UNDER WHICH SUCH CHECKS ARE CANCELED AND ENCUMBRANCES ARE SET UP IN THE AMOUNTS OF THE CHECKS AGAINST THE APPROPRIATIONS CREDITED WITH THE CANCELED CHECKS. WHEN CLAIMS FOR THE PROCEEDS OF THE CHECKS ARE ALLOWED, NEW CHECKS ARE DRAWN BY THE DIVISION OF DISBURSEMENT, TREASURY DEPARTMENT, PURSUANT TO VOUCHERS STATED IN FAVOR OF THE PROPER CLAIMANTS. THIS PROCEDURE, WHICH HAS BEEN IN EFFECT FOR OVER TWO YEARS, HAS PROVEN MOST SATISFACTORY AND HAS GREATLY AIDED THE EXPEDITIOUS ADMINISTRATION OF THE FARM PROGRAMS. HOWEVER, A SERIOUS DIFFICULTY WILL ARISE ON JUNE 30 NEXT, WHEN THE UNEXPENDED BALANCE OF THE 1936-37 APPROPRIATION FOR " CONSERVATION AND USE OF AGRICULTURAL LAND RESOURCES" LAPSES TO THE " SURPLUS FUND," AND ON EACH SUCCEEDING JUNE 30, WHEN SUBSEQUENT ANNUAL APPROPRIATIONS FOR THIS PURPOSE LAPSE TO SURPLUS. THE OBJECT OF THIS LETTER IS TO SUBMIT FOR YOUR CONSIDERATION AND APPROVAL A PLAN TO MEET THE IMPENDING SITUATION.

WHEN AN OFFICE OF THE AGRICULTURAL ADJUSTMENT ADMINISTRATION IS ADVISED BY A REGIONAL DISBURSING OFFICE THAT A CHECK HAS BEEN RETURNED ON ACCOUNT OF THE DEATH OF THE PAYEE, THE CANCELLATION OF SUCH CHECK IS IMMEDIATELY AUTHORIZED BY STANDARD FORM 1044, IRRESPECTIVE OF WHETHER AT THAT TIME A CLAIM HAS BEEN RECEIVED FROM A PERSONAL REPRESENTATIVE, HEIR, OR CREDITOR OF THE DECEDENT. AS A RESULT, WE NOW HAVE APPROXIMATELY 75 CASES INVOLVING $1,200 IN THE NORTHEAST, EAST CENTRAL, AND INSULAR REGIONS AND A COMPARABLY SMALL NUMBER IN THE OTHER THREE REGIONS, WHEREIN CHECKS ISSUED AGAINST THE 1936-1937 AGRICULTURAL CONSERVATION APPROPRIATION FOR THE 1936 AGRICULTURAL CONSERVATION PROGRAM HAVE BEEN CANCELED AND THE AMOUNT CREDITED BACK TO THAT APPROPRIATION, FOR WHICH CLAIMS HAVE NOT AS YET BEEN RECEIVED. IF CLAIMS ARE NOT RECEIVED AND APPROVED, AND CHECKS ISSUED PRIOR TO JULY 1 NEXT, THE CLAIMANTS CANNOT BE PAID OUT OF THE LAPSED APPROPRIATION, BUT MUST AWAIT CONGRESSIONAL ACTION ON THE BASIS OF CERTIFICATIONS OF SETTLEMENTS BY YOUR OFFICE. THE CLAIMANTS' RIGHTS TO IMMEDIATE PAYMENT WILL HAVE BEEN THUS ABRIDGED BY THE SPECIAL PROCEDURE WE PUT INTO EFFECT. UNDER THE USUAL PROCEDURE (OR UNDER THIS SPECIAL PROCEDURE, IF THE CHECKS HAD NOT BEEN CANCELED OR IF YOUR PREAUDIT PERSONNEL HAD BEEN AUTHORIZED TO "ENDORSE THE CHECKS OVER" TO THE PROPER CLAIMANTS) THE RIGHT OF THE PROPER CLAIMANTS TO IMMEDIATE PAYMENT WOULD CONTINUE TO EXIST AFTER JUNE 30 NEXT, AS THE AMOUNT OF MONEY DUE THEM WOULD BE IN THE " OUTSTANDING LIABILITIES" ACCOUNT AND WOULD REMAIN AVAILABLE THEREIN INDEFINITELY.

THE CANCELLATION OF EACH OF THESE CHECKS WAS AUTHORIZED UPON THE ASSUMPTION THAT THE PROPER CLAIMANTS WOULD FILE CLAIMS IN TIME TO HAVE THEM PAID PRIOR TO JULY 1 NEXT. SINCE IT NOW APPEARS LIKELY THAT, FOR THE CASES UNDER DISCUSSION, THIS ASSUMPTION WAS INCORRECT, IT SEEMS REASONABLE THAT THESE CASES SHOULD BE HANDLED LIKE OTHER CASES WHEREIN A CHECK HAS BEEN CANCELED THROUGH ERROR AND, UPON DISCOVERY OF THAT FACT, A "DUMMY" VOUCHER IS STATED, PROPERLY CROSS-REFERENCED TO THE ORIGINAL PAID VOUCHER, FOR ISSUANCE OF A NEW CHECK IN LIEU OF THAT ERRONEOUSLY CANCELED.

ACCORDINGLY, IT IS PROPOSED THAT PRIOR TO JULY 1 NEXT, A "DUMMY" VOUCHER BE ADMINISTRATIVELY CERTIFIED IN FAVOR OF EACH DECEDENT FOR WHOM NO CLAIM HAS BEEN MADE, SUPPORTED BY PROPER CROSS REFERENCES TO THE FORMER PAID VOUCHER AND THE CANCELED CHECK, AND THAT UPON APPROVAL OF SUCH VOUCHER BY YOUR FIELD PREAUDIT OFFICE, THE DISBURSING OFFICE DRAW A NEW CHECK IN FAVOR OF THE DECEDENT. THE "DUMMY" VOUCHER WILL CONTAIN INSTRUCTIONS THAT THE DISBURSING OFFICE SHOULD IMMEDIATELY FORWARD SUCH CHECK TO YOUR OFFICE FOR SAFEKEEPING. THUS, THE AMOUNT OF THE CHECK WOULD, UNDER YOUR USUAL PROCEDURE, BE TRANSFERRED TO THE " OUTSTANDING LIABILITIES" ACCOUNT AT THE PROPER TIME AND THERE IT WOULD REMAIN AVAILABLE FOR THE RIGHTFUL CLAIMANT. THE OUTLINED PROCEDURE SHOULD APPLY TO CASES HANDLED IN WASHINGTON AS WELL AS IN THE FIELD.

IT IS PROPOSED THAT THE FOREGOING PROCEDURE BE FOLLOWED EACH JUNE WITH RESPECT TO THE CASES ARISING OUT OF PROGRAMS PAID FROM APPROPRIATIONS WHICH ON JUNE 30 OF SUCH YEAR WOULD CEASE TO BE AVAILABLE FOR EXPENDITURES.

UNDER THE SUGGESTED PROCEDURE CHECKS WOULD BE ISSUED TO PERSONS KNOWN TO BE DEAD. IN 16 COMP. DEC. 805, IT WAS HELD THAT THE ISSUANCE OF A CHECK TO A PERSON KNOWN TO BE DEAD COULD NOT BE SANCTIONED. IT HAS BEEN HELD THAT THE ISSUANCE OF A CHECK TO A PERSON KNOWN TO BE DEAD IS AN ACT UTTERLY VOID, AND THAT THE CHECK ITSELF WAS ABSOLUTELY VOID, AND THAT NO ACT OF ANYONE COULD BREATHE INTO IT THE BREATH OF LIFE, OR MAKE IT OF ANY VALUE WHATEVER. UNITED STATES V. FIRST NATIONAL BANK OF COFFEYVILLE, 82 FED. 410. IN A-28843, SEPTEMBER 27, 1929, THIS OFFICE HELD THAT THERE WAS NO AUTHORITY TO DRAW A CHECK IN FAVOR OF A PERSON KNOWN TO BE DECEASED, AND THE CHECK ISSUED BY THE DISBURSING OFFICER SHOULD, THEREFORE, BE CANCELED AND PAYMENT OF THE AMOUNT DUE SHOULD BE MADE TO THE PERSONAL REPRESENTATIVE BY MEANS OF A DIRECT SETTLEMENT BY THIS OFFICE.

WHERE THE PAYEE NAMED IN A CHECK DIES SUBSEQUENT TO THE ISSUANCE OF SUCH CHECK, AND IN SOME CASES WHERE A CHECK HAS BEEN ISSUED TO A DECEASED PERSON WITHOUT NOTICE OF THE PERSON'S DEATH, AND IT HAS BEEN DETERMINED THAT THE AMOUNT OF THE CHECK WAS DUE THE PAYEE AT THE TIME OF HIS DEATH, AND THE CHECK OTHERWISE REPRESENTS A LEGAL OBLIGATION OF THE UNITED STATES, AND PROMPT APPLICATION FOR PAYMENT OF THE AMOUNT IS MADE ON BEHALF OF THE ESTATE OR A DISTRIBUTEE ENTITLED THERETO, THERE HAS BEEN ADOPTED THE PROCEDURE OF DISPOSING OF THE CHECK BY PLACING AN APPROPRIATE ENDORSEMENT THEREON BY THIS OFFICE MAKING IT PAYABLE TO THE PERSON ENTITLED TO RECEIVE THE PROCEEDS THEREOF. HOWEVER, SUCH PROCEDURE IS AN EXCEPTION TO THE GENERAL RULE REQUIRING CANCELLATION OF CHECKS WHEN THEY CANNOT BE CASHED AS DRAWN AND, IN EFFECT, IS TANTAMOUNT TO A SETTLEMENT BY THIS OFFICE, AND MAY NOT BE FOLLOWED IN ANY CASE WITHOUT DESIGNATING THE PERSON ENTITLED TO RECEIVE THE PROCEEDS OF THE CHECK AND GIVE A VALID ACQUITTANCE TO THE UNITED STATES. 5 COMP. GEN. 480; 14 COMP. GEN. 212.

SECTION 5 OF THE ACT OF JUNE 20, 1874 (31 U.S.C. 713), PROVIDES THAT ALL BALANCES OF ANNUAL APPROPRIATIONS REMAINING ON THE BOOKS OF THE TREASURY FOR TWO FULL FISCAL YEARS SHALL BE CARRIED TO THE SURPLUS FUND AND COVERED INTO THE TREASURY. WHEN CHECKS HAVE BEEN CANCELED UNDER THE PROCEDURE DESCRIBED IN YOUR LETTER THE SITUATION, INSOFAR AS THE APPROPRIATION IS CONCERNED, IS THE SAME AS THOUGH THE CHECK HAD NOT BEEN ISSUED. THE AMOUNTS THEREOF REVERT TO OR REMAIN IN THE APPROPRIATION, AND THE CHECKS ARE NO LONGER OUTSTANDING CHECKS; NEITHER CAN THE AMOUNTS THEREOF BE CONSIDERED AS OUTSTANDING LIABILITIES, BUT MUST BE REGARDED AS A PART OF THE BALANCE OF THE APPROPRIATION WHICH IS REQUIRED BY THE STATUTE ABOVE CITED TO BE CARRIED TO THE SURPLUS FUND OF THE TREASURY.

BY ACT OF MARCH 19, 1936, 49 STAT. 1183, FUNDS WERE MADE AVAILABLE TO ENABLE YOU TO CARRY INTO EFFECT CERTAIN PROVISIONS OF THE SOIL CONSERVATION AND DOMESTIC ALLOTMENT ACT, AND IT WAS PROVIDED THAT SAID FUNDS SHOULD REMAIN AVAILABLE UNTIL JUNE 30, 1938, FOR COMPLIANCES DURING THE CALENDAR YEAR 1936. IT HAS BEEN NEARLY FOUR YEARS SINCE THE FARMING PRACTICES WERE CARRIED OUT. IF THE PERSONS ENTITLED TO PAYMENT HAVE NOT YET FILED CLAIM FOR THE AMOUNTS DUE, IT IS NOT BELIEVED THAT ANY SERIOUS INCONVENIENCE SHOULD RESULT IN SUCH CASES WHERE THE CLAIMS HAVE TO BE REPORTED TO THE CONGRESS AS CERTIFIED CLAIMS. IN ANY EVENT, SUCH INCONVENIENCE AS MAY RESULT FROM THE DELAY IN THE PAYMENT IN SUCH CASES IS DUE NOT TO ANY ACTION OF THE GOVERNMENT BUT TO THE CLAIMANTS' FAILURE TO FILE THEIR CLAIMS PROMPTLY.

IN SPECIFIC ANSWER TO THE QUESTION YOU SUBMIT, I HAVE TO ADVISE THAT THERE IS NO AUTHORITY OF LAW FOR THE PROCEDURE YOU SUGGEST.